Item 18 - Appeal Application Nos. 2023-02 and 2023-03 for Cabrillo Town Center project

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PROPERTY TAX The City receives a portion of the ad valorem property taxes to pay for municipal services. According to the City of Santa Ana property taxes within the Project is approximately 11 percent of the one percent property tax levy. The County receives 13.1 percent of the one percent property tax levy. The estimated property taxes were based on the FRH Proforma assumptions provided to TCG in March 2022. TCG, using FRH proforma assumptions, estimates that the total value of the development after full build out and stabilized occupancy would be approximately $286 million by end of year 2. Based on the total Project value at stabilization upon 2027, TCG estimates that the City is expected to receive approximately $340K in property tax revenues annually. Assuming no resale and the existing maximum Proposition 13 inflation rate of two percent annually, we project that total property tax revenues to the City would total $10.5 million over the construction period and 28-year projection period, or $5.5 million in 2022 dollars. For a more detailed projection, see Appendix 1. PROPERTY TAX IN -LIEU OF MOTOR VEHICLE LICENSES FEES Established in 1935, the Motor Vehicle License Fee ("VLF") was essentially a tax on vehicle ownership. The State of California ("State") collects VLF annually when vehicles are registered and was historically allocated to cities and counties based on a statutory formula. In 2004, during the State's budget crisis, about 90 percent of each city's VLF revenue was replaced with property tax revenue, and cities in particular began to receive an allocation of property tax from the Educational Revenue Augmentation Fund ("ERAF") in an amount equal to whattheywould have received in VLF under an older VLF allocation formula. Under current law, the property tax in -lieu of VLF revenue increases based on assessed value growth in a jurisdiction, thus estimated revenues are based on changes in assessed value created by the Project. While the amount of property tax in lieu varies from city to city under the current apportionment methodology, for Santa Ana, the formula to calculate VLF revenue can be simplified to 5.2 percent of the one percent of the City's total assessed value. Based on projected assessed values, the Project would generate approximately $149K in established property tax in -lieu of VLF revenues at build -out as depicted in Table 3. Over the 28-year forecast, we project the cumulative property tax in -lieu of VLF from the Project to be $4.6 million (or $2.4 million in 2022 dollars) For a more detailed projection, see Appendix 2. FRH Realty LLC 22179.01 Santa Ana, CA April 2023 City Council 18 — 384 10/3/2023